Debenhams lines up Deloitte as retailer takes on legal challenge to restructuring plan
Debenhams has lined up advisers from professional services giant Deloitte as it prepares to fight a legal challenge to its restructuring plan.
Deloitte is on standby in case Debenhams loses the case and fails to secure an appeal, an event that could tip the embattled department store into administration.
Read more: Debenhams appoints restructuring expect as chief executive
In May the retailer secured the backing of its creditors to push ahead with a company voluntary arrangement (CVA) restructuring plan, which earmarked 50 stores for closure and approved rent reductions at more than 100.
However, Combined Property Control Group (CPC), which is the landlord of six Debenhams stores, has launched a legal challenge to the CVA. If CPC wins the case, which begins at London’s High Court tomorrow, the restructuring plan could unravel.
Sports Direct, which was Debenhams’ largest shareholder, withdrew its own legal challenge July. However, the retailer is backing CPC’s case.
“We remain extremely confident this challenge is without merit and expect it to fail,” a spokesperson for Debenhams said.
“In the meantime, we are progressing with our restructuring, which was approved by the vast majority of creditors, including over 80 per cent of landlords.”
Sports Direct owner Mike Ashley battled to take control of the retailer before it was taken over by a group of its lenders in April, wiping out shareholders including Sports Direct.
The department store had previously rejected a £200m takeover offer by Sports Direct, which was contingent on Ashley taking over as chief executive.
Read more: Debenhams prepares to as lenders for extra £50m lifeline
The retailer appointed turnaround expert Stefaan Vansteenkiste, a director of restructuring specialist Alvarez & Marsal, as chief executive last month.
Former chief executive Sergio Bucher was ousted as chief executive when the group’s lenders took control.